tl;dr : Fixed !
Another brand new machine was built for the user. It worked fine for an hour or so and then after that, lo and behold, the exact same issue.
The general consensus was that it MUST be a rogue windows update. So we tried a couple of things, like restoring the machine to a previous state. Uninstalling windows updates manually etc. Nothing worked.
Then the owner of the machine had an epiphany. Apparently, he had gotten used to this registry hack, which was the reason for this uber mysterious error. We undid that, and voilà the mvn clean install worked fine !
I am still very curious though about why it would affect a java process, so here is a follow up question around it : Why does this autorun-cmd registry hack affect a java/maven process? (Complete with a gihub repo to isolate the offending code.)
Thanks for all the helpful comments.